Procurement After Rental Assistance Demonstration (RAD) 5/14/2019 LFL International Inc.

RAD FREQUENTLY ASKED QUESTIONS Question: What procurement rules apply to RAD during the application phase? Answer: HUD has authorized $100,000 in public housing funds that PHAs can spend on pre- development expenses without HUD approval. Because these are public housing funds and the project has not yet converted assistance under RAD, PHAs must comply with public housing procurement rules. Note that HUD is not capping the total amount that can be spent on pre-development expenses; rather, the $100,000 is the amount that can be spent prior to approval of the Financing Plan. It is likely that some projects will incur more than $100,000 on pre-development costs. RAD FREQUENTLY ASKED QUESTIONS LFL International Inc. 5/14/2019

RAD-FREQUENTLY ASKED QUESTIONS How does Section 3 apply to RAD Conversions? SECTION 3 The requirements of Section 3 apply to HUD funding that is used for or in connection with new construction, rehabilitation or infrastructure projects or activities. While the RAD program itself does not provide funding for housing construction or rehabilitation, the RAD Notice (PIH 2012-32 Rev 2) applies Section 3 to all initial repairs or new construction identified in the Financing Plan. Accordingly, for the purposes of the regulation all work included in the RAD Conversion Commitment is considered “Section 3 covered projects” and the Project Owner is considered the “Recipient.” Project owners must take proactive steps to hire local low-income persons and to award contracts to businesses that are owned by or substantially employ those persons. Additionally, the requirements of Section 3 may apply after conversion when HUD funding is used in connection with construction or rehabilitation activities. LFL International Inc. 5/14/2019

RAD FREQUENTLY ASKED QUESTIONS Davis Bacon A new Rental Assistance Demonstration (RAD) notice from HUD amends the previous final notice by stating that “that execution of a Project Based Rental Assistance (PBRA) contract as a result of the conversion of Rent Supp, RAP, Mod Rehab, or Mod Rehab SRO contracts through RAD after the publication of this notice does not trigger Davis-Bacon prevailing wage requirements.” HUD cites maximization of resources and better aligning RAD with underlying PBRA statutory and regulatory requirements as reasons for the amendment. The amendment goes into on effect Dec. 11, 2018. RAD FREQUENTLY ASKED QUESTIONS LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Developing a formal product procurement policy is essential for property management teams. Clearly defined strategies and processes help you control day-to-day costs across all departments, and benefit owner revenue streams when applied consistently. Rental Assistance Demonstration (RAD) LFL International Inc. 5/14/2019

PROFITABILITY 5/14/2019 LFL International Inc.

PROFITABILITY AREAS THAT MUST BE ADDRESSED INVENTORY AND SUPPLY POLICIES REDUCE COSTS WITHOUT COMPROMISING SERVICE and QUALITY STRATEGIES AND PROCESSES PROFITABILITY LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Negotiate volume discounts. On-demand- supplies typically cost more than items purchased under a volume stock and replenish plan. Rental Assistance Demonstration (RAD) LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Designate a purchasing control center – even if you assign those duties to a single employee The designated department could be a procurement specialist or property management staff Greater control improves consistency and accountability. Rental Assistance Demonstration (RAD) LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Annual process reviews ensure continuity of service for your tenants and higher profit margins for your owners. Once a year – either at the turn of the calendar year or the beginning of your fiscal year LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) PRODUCT STANDARDIZATION Product standardization helps ensure that a property management company is saving costs while still providing the best quality. An agency review of products, brands and specifications and any other relevant product information to determine Designated product Pool This provides individual property managers with a pre-selected base of products to choose from that have already been pre-approved and have been determined price competitve. Rental Assistance Demonstration (RAD) LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Maintaining a warranty-tracking system eliminates unnecessary equipment purchases Supplementing your warranty-tracking program with a spreadsheet used for tracking equipment and supplies strengthens internal controls. Rental Assistance Demonstration (RAD) LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Initiate a purchase order system for any item or service over a set threshold. You may mandate that all purchases require management approval or have a purchase order. LFL International Inc. 5/14/2019

Rental Assistance Demonstration (RAD) Prior to payment, every invoice must be reviewed for: Price inconsistencies/variances Unapproved charges A clearly defined due date Late fee policy Itemized listing of charges Correct quantity ordered/received Authorization (signature or employee name identifying who placed the order) LFL International Inc. 5/14/2019

QUESTIONS LFL International Inc. 5/14/2019